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September 11 impact on aviation industry
9/11 attacks and how it changed airport safety
9/11 attacks and how it changed airport safety
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Recommended: September 11 impact on aviation industry
Kathryn Gehlmann
Professor McClung
Marketing 215
15 September 2015
The Adjustments Made to Southwest Airlines After 2001
Environmental factors have changed drastically over the past fourteen years. Since September 11, 2001, Airlines have changed greatly to enable safer and cost efficient flights for the world. Specifically, Southwest Airlines has changed their marketing strategy for their flights since 2001. Southwest has faced environmental factors that have affected the costs in airlines, exploited those environmental factors, and faced influential factors in addition.
There are many factors that could have affected the airlines after 2001. Southwest airlines faced environmental factors such as competition and social/cultural forces.
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Competition can be defined as a number of different marketing brands that are competing against yours. There are many airlines that compete against each other for the highest number of tickets purchased. Southwest Airlines wants to, essentially, clarify that they are the best in the business. Another example of an environmental factor includes social/cultural forces. These two factors are defined by an individual’s/groups structure and dynamic about their marketing operations in addition to their trends (MY MARKETING NOTEBOOK 2015). Southwest Airlines wants to track individuals and groups of people who prefer certain things when they are flying. They want to make sure that they have everything that these types of people want on a flight so it attracts them. The cost of flights vary among different airlines. They are always changing due to the other airlines that are in competition with them. This, however, did not affect the purchasing of tickets by people who chose to use their airline. These two environmental forces affected Southwest Airlines after 2001. After learning about the environmental factors that were affecting Southwest Airlines, they exploited them with specific tactics.
For example, giants of the industry merged to make super-giants. Southwest Airlines decided to merge with another airline called AirTran. They formed one huge airline that became the fourth-largest airline in the United States. This allowed Southwest Airlines to pull in even more people than they had been doing separately. This was also a positive impact because if people were fans of the AirTran Airlines, it is a possibility that they will stick with their preferences and continue to buy tickets for their flights. This benefited Southwest Airlines greatly. Another example of specific tactics that Southwest Airlines implemented included the number of people that were on airplanes within the last year compared to that of 2001. In 2010, there were 720.4 million people who were on airplanes. In 2000, 719.1 million people were on airplanes, which was slightly lower than people who fly even after September 11th. After the attacks on America, airlines actually were seeing more people flying than they were in 2001. So, these special tactics that Southwest Airlines implemented increased their sales in tickets (Goldschein 2011). However, there are several influential factors that affected these
tactics. Southwest Airlines faced influential factors from the special tactics that they created. For example, the oldest airlines in the world started to go under. Mexicana Airlines, which has been around since 2010, couldn’t keep up with the changes in the environment and people stopped purchasing their tickets causing them to go under. Outside of the U.S., Iraqi Airlines was also affected by these factors and went under in 2010. These influencing factors caused other airlines to cease business (Goldschein 2011). In addition, decrease in travel was also another influential factor. Many people are not traveling on ground, which increase the amount of people who travel by plane. Recent changes in safety has reassured people’s ideas about flying and are doing so more often. The influential factors have affected the environmental factors although mostly for the better. In conclusion, airlines has changed remarkably over the last fourteen years by creating many advances in their industry to ensure a safe flight from point A to point B. Southwest Airlines have establish a strong relationship with its buyers and instilled trust and reassurance into the minds of Americans after the attacks on our country. Southwest has faced environmental factors that have affected the costs in airlines, exploited those environmental factors, and faced influential factors, but have continued to show a strong relationship with people flying throughout the world. Works Cited Goldschein, E. (2011, September 8). 13 Ways The U.S. Airline Industry Has Changed Since 9/11. Retrieved September 14, 2015. MY MARKETING NOTEBOOK: The six (6) external environmental forces that can influence your business. (2012, November 13). Retrieved September 14, 2015.
For starters a few days before the attack on 9/11, the airlines stocks did go up. Which means the supply and demand was greater. America was making more money, which is good. The airlines that stocks markets went up, were the airlines that were hijacked which than lead to them going bankrupt. Gabi Logan was saying on USA today “ Despite this government-funded measure, several prominent American airlines declared bankruptcy not long after the 9/11 attacks.” Due to bankruptcy more than just money was
Southwest Airlines is operating in an industry that is struggling to make profits. The slowing economic growth and raising fuel costs are lowering earnings while revenues remain the same. The macroeconomic factors affecting the airline industry include unemployment, the economic growth in the United States, and inflation. With low economic growth, consumers are finding luxury items more difficult to purchase and airline tickets for vacations fall into that category. Unemployment contributes to a lack of vacation travelers since individuals who are not employed do not have extra money for vacation or airline tickets. Inflation also causes operating costs of the airlines to be higher cutting into profits.
Along with the low stock index numbers of September 17th, the airline industry and travel stocks were also rocked. One of several airlines announcing layoffs, US Airways said that they would be terminating 11,000 jobs. These heavy losses were contributed to airlines “being grounded last week [week of September 11th], plus passengers have been apprehensive to fly, in the wake of the hijackings” (Stock Markets Reopen 1).
Since its first grand opening in 1971, Southwest Airlines has shown steady growth, and now carries more passengers than any other low-cost carrier in the world (Wharton, 2010). To expand the business operations, Southwest Airlines took over AirTran in 2010 as a strategy to gain more market share for the Southeast region and international flights. However, the acquisition of AirTran brought upcoming challenges both internally and externally for Southwest Airlines. In this case analysis, the objectives are to focus on the change process post the merger with AirTran, and to evaluate alternatives to address the impacts of the merger. II.
When the attacks of September 11th occurred, the federal government had to completely close down some airports in the US. This created a negative effect on the industry as it was a shock to their entire organization. Planes in the US and around the world were canceled due to this attack as well. Planes were not flying anywhere, as the plan was to prevent any other attack. Each plane that was cancelled had to be paid by the airline company directly. According to the International Air Transport Association there was a drastic change in the amount of flights between the date before and after the event. Around 37,600 less flights flew the day after the attack had occurred. The number of flights dramatically decreased in those three days; in addition every...
Southwest Airlines strategy of focusing on short haul passenger and providing rates as low as one third of their competitors, they have seen tremendous growth in the last decade. Market share for top city pairs on Southwest's schedule has reached 80% to 85%. Maintaining the largest fleet of 737's in the world and utilizing point-to-point versus the hub-and-spoke method of connection philosophy allowed Southwest to provide their service to more people at a lower cost. By putting the employee first, Southwest has found the key to success in the airline business. A happy worker is a more productive one as well as a better service provider. Southwest will continue to reserve their growth in the future by entering select markets only after careful market research.
After September 11th, 2001, the airline industry experienced a significant drop in travel. The reasons for the airline industry downfalls also included a weak U.S and global economy, a tremendous increase in fuel costs, fears of terrorist's attacks, and a decrease in both business and vacation travel.
Even though Southwest offers no-frills, there is still a high degree of customer satisfaction that continuously builds customer loyalty for the company. As mentioned, Southwest offers low prices on their airplane tickets. Also, Southwest is renowned in the airline industry for its short turnaround time on arrivals and departures. And since people's biggest concern nowadays is money and time, having low price airline tickets to cater their traveling needs in a shorter period of time will surely satisfy them. Moreover, aside from the low prices offered, what attracts to customers is Southwest’s way in dealing with them. The employees of the airline treat their customers well and really listen to their needs.
More than 37 years ago, Rollin King and Herb Kelleher got together and decided to start a different kind of airline. They began with one simple notion: If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline. And you know what? They were right. What began as a small Texas airline has grown to become one of the largest airlines in America. Today, Southwest Airlines flies over 104 million passengers a year to 64 great cities all across the country, and we do it more than 3,400 times a day.
Pricing. Their pricing strategy is based off their market position as a budget airline. Positioning their company as a budget airline, Southwest can maintain and keep their lower price points compared to their competitors. For Southwest to maintain sustainability as a market leader, they must effectively utilize their resources to reduce their cost of operations. By only operating one type of aircraft, short non-stop flights, point to point routes, and flying into less crowded secondary airports, this has allowed Southwest Airlines to keep their price points down while simultaneously reducing their planes turnaround time.
Southwest has comprehensive strategy and they work with harmony. They are low cost airlines which make the customer feel like royalty. Southwest have a winning strategy is proven by their profit year after year even thought they had economy crisis. Since 1973 Southwest reported a profit each year even when they lost billions of dollars from the year 1980 to 2009 because of the low operating cost strategy, low fares and customer service. Since the start of Southwest they have stay faithful of keeping low cost across the industry. Their value in corporate culture reflected through their prices and customer service.
Before to select the proper alternative, three alternatives were analysed and evaluated under four decisions criteria: customer experience, cost, growth rate / market penetration and ease to implementation (See Exhibit 2: Factor Analysis). Between all the alternatives, it was suggested that Southwest Airlines enters to New York City by bidding the slots and gates at the LGA (See Exhibit 3: Alternatives Analysis). This alternative sustains the challenge of changing the customer experience which means adding more flights from and to the East; furthermore, entering to new markets will reinforce “the power of the network” through LGA. At the same time, this decision will allow signing more code-sharing agreements with other airlines flying to international destinations and offer new products and services to LUV customers as loyalty rewards, in-flight internet, onboard duty-free purchases, etc.; as a result of this, it will increase passenger’s insights and experiences by flying with Southwest Airlines. Nevertheless, there is potential risk by selecting this alternative, in the recent years the energy prices has had a huge increase affecting costs, fares and even capacity needed, however Southwest Airlines has been able to hedge fuel for decad...
Airline and travel industry profitability has been strapped by a series of events starting with a recession in business travel after the dotcom bust, followed by 9/11, the SARS epidemic, the Iraq wars, rising aviation turbine fuel prices, and the challenge from low-cost carriers. (Narayan Pandit, 2005) The fallout from rising fuel prices has been so extreme that any efficiency gains that airlines attempted to make could not make up for structural problems where labor costs remained high and low cost competition had continued to drive down yields or average fares at leading hub airports. In the last decade, US airlines alone had a yearly average of net losses of $9.1 billion (Coombs, 2011).
This concept was challenged by Southwest Airlines by marketing itself as a cost leader. Their entire growth curve in the industry has been attributed to its cost effective strategies which has made it more efficient and successful than traditional airlines.
The mission of Southwest Airlines is a dedication to the highest quality of service delivered with warmth, friendliness, individual pride, and company spirit (Mission…, 2007). The company also provides opportunities for learning and personal growth to each employee. Creativity and innovation is very important and highly encouraged, for the purposes of improving effectiveness. Employees are to be provided the same concern, respect, and caring attitude within the organization that the employees are expected to share with the customer. Southwest Airlines was initially created to be a low-cost alternative to high price of intra-Texas air carriers (Freiberg, 1996). Southwest’s fares were originally supposed to compete with car and bus transportation. It was a little airline, and it would withstand the test of time. As a discount, no-frills airline, it would provide stiff competition for larger airlines. Their strategy was to operate at low cost, offering no food, no movies, no first class, and no reserved seats. They created their own market and provided increased turnaround times at the gate, by avoiding hub-and-spoke airports and opting for short-haul, direct flights. Through this market approach, Southwest has a majority of market share in the markets they serve.